Figures out yesterday offer a glimmer of hope that Singapore's lacklustre export performance in recent months is poised for a gradual rebound.
Non-oil domestic exports (Nodx) shrank 3.3 per cent last month compared with the same period a year ago - the third consecutive month of decline - but that was still a smaller contraction than the 4 per cent decline economists had expected. It was also well down on June's 4.6 per cent decrease.
The data suggests that manufacturing demand may be beginning to stabilise after weakness in the second quarter, said Citi economist Kit Wei Zheng, who added that the picture will be clearer when last month's factory output numbers are out next week.
The manufacturing sector, which makes up a fifth of Singapore's economy, grew 1.5 per cent in the April to June period, down from the 9.9 per cent expansion in the first quarter.
The slower growth in the second quarter was mainly due to weaker electronics production.
The fall in exports in July compared with the same month last year was due to declines in both electronic and non-electronic shipments, trade agency IE Singapore said.
It added that falling exports of integrated circuits, parts of personal computers and disk media products were the biggest drags on electronic products shipments.
The decline in non-electronic products shipments was led by lower exports of structures of ships and boats, aircraft parts and civil engineering equipment parts.
While electronics exports fell 7.9 per cent in July over the same month last year, they likely expanded about 8 per cent over June's shipments, said Mr Kit.
"Core" exports - which exclude volatile sectors such as pharmaceuticals - fell 1.4 per cent over last year, but are estimated to have grown 5.2 per cent month on month, he added.
Still, economists say the outlook for the year remains uncertain. Bank of America Merrill Lynch economist Chua Hak Bin said ongoing economic restructuring and stricter foreign worker policies "are likely to limit the lift from a modest pickup in the global economy in the second half".
Mr Kit also warned that external demand remains weak, "with a swift rebound not yet in sight".
He pointed to the decline in non-oil re-exports - goods exported from Singapore in the same form in which they were imported - as a sign that trade has not yet picked up.
Non-oil re-exports decreased by 1.7 per cent last month, from a 7.5 per cent expansion in the previous month. The measure is viewed as a gauge of how trade-related services are performing.
Nodx contracted 2.3 per cent in the first half of this year from a year ago.
IE Singapore expects a "modest improvement", in tandem with a gradual pickup in the global economy. Government forecasts tip exports to shrink between 1 and 2 per cent this year.